TDS Rate Applicability : Frequently Asked Questions

On Saturday, September 26, 2009 | 12:34 AM

What is the date when the Finance Bill became Finance Act 2009 ?
  • 19-08-2009
In which cases surcharge on TDS rates is NOT applicable ?
  • On all payment to residents
  • On all payment to non-corporate non-residents
  • On all payments to foreign corporate if total payment is less than 1 Crore
In which cases surcharge on TDS rates is applicable ?
  • On all payments to foreign corporate if total payment is more than 1 Crore
In which cases Education Cess, Secondary and Higher Education Cess is NOT applicable ?
  • On all payments to residents except salaries payment
In which cases Education Cess, Secondary and Higher Education Cess is applicable ?
  • On salaries
  • On all payment to non-residents and foreign companies
What is the effective date for above changes in applicability of surcharge and education cess?

  • These changes are applicable on the passing of Finance Bill . This date is 19-08-2009. However there are different views on applicability date. One view is that since these changes are for the full financial year, one can take benefit of Section 294 of the income tax Act and start applying this rate from the date of presentation of finance bill.(in my view its applicable from 01.04.2009 , same view is given in The Chartered Accountant Journal released by ICAI)
  • Please ask your tax consultant for more clarifications.
Status
Payment
Surcharge
Cess
Resident
Corporate
Other than Salaries
N
N
Resident
Non-corporate
Other than Salaries
N
N
Resident
Non- Corporate
Salaries
N
Y
Non-Resident
Corporate
<= 1 crore
N
Y
Non-Resident
Corporate
> 1 crore
Y
Y
Non-Resident
Non- Corporate

N
Y

There has been change in TDS Rates for 94C- Contractual Payments and 94I- rental payments. What is the effective date for the same ?
  • These changes are applicable from 01-10-2009.
Apart from the above , is there any other change in the TDS Rates ?
What about penal rate of 20% where valid PAN is not given ?
  • This provision is applicable from 01-04-2010. Till such time even if valid PAN is not given , normal rate will be applied.
What is your source of above information.
  • Applicability of surcharge is mentioned in Clause (5), (6), (7) and (8) in Chapter II of the Finance ( No 2) Act , 2009.
  • Applicability of Education Cess : Clause (11). Applicability of Secondary and Higher Education Cess : Clause (12).
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